Covid Apartheid-Complete State-level Nationalisation of Hospitals?

Covid Apartheid

Covid Apartheid-Complete State-level Nationalisation of Hospitals?

Background

There has been news floating on the WhatsApp on complete takeover of private and charitable hospitals by the Maharashtra Government. MAHARASHTRA TAKES CONTROL OF PRIVATE COVID HOSPITALS, FIXES DAILY RATES – The Daily Guardian. The article was published on May 7, 2021 and quotes Sudhakar Shinde, CEO, State Health Guarantee Society saying, “We have issued this order as per the suggestion of both the ministers.” This maybe a fake news as Sudhakar Shinde succumbed to Covid on Oct 10, 2020. IAS officer Sudhakar Shinde passes away in Pune due to Covid-19 | Hindustan Times

However the issue here is for debate is: Should the State Governments Nationalise Hospitals? Second issue here is the alleged hospitals charges being imposed by the private hospitals and how do we deal with it?

Private Hospitals Take Over in 2020 Wave one of Covid by State Government

As per the announcement last year in April 2020, 80% of the beds of the private and charitable hospitals in the state were taken over by the State Government for managing the first wave of Covid. As per the arrangement, the private and charitable hospital owners were free to charge their prices for the remaining as per their operating costs and charge masters. The citizens had the choice of going for treatment to the private sector on their own or request the State Government to allocate a bed in any of the hospitals in the state whether Government or Private as per the rates announced by the State Government.

Covid Apartheid-The Consumer Right of Treatment if They Choose

Last year a famous Indian Celebrity and Film star tested Covid Positive and was admitted himself and his family members to a private hospital in Mumbai. Amitabh Bachchan tests Covid-19 positive, admitted to Nanavati hospital (indiatimes.com). He had not approached the State Government for bearing his treatment costs. There was no negative media outbreak on how exorbitantly the celebrity was charged for his treatment and whether the private hospital in question chose to offer their services on their quota of beds under their management to the said celebrity free of cost, or at subsidized costs or at full price. Had the said celebrity in question chosen to request for his treatment to the State Government, he may have been admitted to Cooper Hospital or any other hospital facility that the State Health Officer (SHO) deems fit to allocate. But the said celebrity choose to deal the situation on his own and contract with the private hospital at a price which is agreed between the two parties and is mutually binding upon between the two parties. Similarly, if citizens opt for private hospitals on their own will, why should there be a hue and cry that there is a differential of prices between the State Government mandate prices for the beds being managed by the State Government in the private hospitals leveraging their infrastructure and staff and the prices being charged to the celebrities and those who can afford to pay the full price and exercise their right to treatment at a certain private hospital exercising their option to pay out of pocket or through their health insurance.

I call this Covid Apartheid. Therefore there should not be fake news escalations about the exorbitant charges. Covid emergency situation is like an SOS as like a heart attack. You have to either treat the person or if let untreated without medical intervention the person dies. So it is catastrophic. If a certain private hospital charges INR 10 lakhs for an open heart surgery and the State-level prices under various healthcare schemes is as low as INR 60,000 (in Karnataka), the real cost of which is much higher as the State Government is cross subsidizing through the tax payer’s money and budgetary support, the media should not make a mole out of nothing. It’s the choice exercised by the individual punting on his health and wealth. There cannot be an apartheid comparing the prices and the quality of services delivered. So is the Covid. The media should stop amplifying negative news about the pricing of services in the private hospitals. They are comparing apples and oranges and want an apartheid on the ability to pay and enjoy different standards and services between different classes and masses.

Dealing with Exorbitant Prices by Private Hospitals

There have been mechanisms in place for any adverse and or exorbitant prices being charged and how to escalate and settle these issues whether it is out of pocket or through a Third-Party Administrator (TPA) of the Healthcare Insurers. Let us understand that no private sector hospital in this country wants to profiteer. I agree with the media that there are rogue private hospitals who may have out of greed charged exorbitant prices playing on the situation. I too was a victim of such a private hospital when I was suffering life and death situation on a Covid like symptoms way back in 2012. However, I settled the issues through various redressal mechanisms in place including the malpractice by one of the treating doctor of the private hospital.

State Nationalisation of Private and Charitable Hospitals

Let us understand it cost over INR 1 crore to set up a hospital bed. If the State Government takes over 80% of that capacity and assuming that the state reimburses INR 10000 per day for those beds it has taken over, it would take around 6-years for the hospital to break even on their capital and operating costs. The hospital operator has bank loans and other liabilities to settle for the risk they have taken to set up the facility to treat their out of pocket and insurance customers. To offset these liabilities and daily losses on the State managed beds in their hospital, the private operator has to offset that from the remaining 20% of the beds it is free to charge whatever prices. The State Government has not taken over the proportionate liability of 80% of beds taken over. If you do the maths, it would require the private operator to charge anywhere from INR 45,000 to INR 90,000 per bed per day just to cover their costs.

We know the healthcare outcome of private sector hospitals and government hospitals. Therefore, there is a price differential. Let me give you an analogy here which is a bit far-fetched. From tomorrow the State Government says that 80% of your private wealth management will be under the Private Sector Bank will be managed like Public Sector Banks (PSU). PSU banks deliver Hindu rate of return of say 3%pa while the Private Banks deliver 15%pa on your money charging 3% fees for the wealth under management. So now you will get 3% pa return on 80% of your wealth banked while 20% of will deliver 15%pa. Will the media start writing that Private Sector Banks are earning exorbitant returns of 15%pa for the rich and the poor laborer who is banking and saving with PSU Banks is just getting 3%pa. Would you allow your personal wealth to be managed like a PSU Bank? Similarly will you allow your health to be put into PSU Hospital hands if you value it? Its your call and there is a price to pay.

We know the outcomes of Bank Nationalisation of the earlier era. Do we need to subject the healthcare sector to state nationalization?

Should We Impose Complete Lockdown Now?

Background

Our Supreme Court has directed the Central and state governments to consider imposing a ban on mass gatherings and super spreader events. “We would seriously urge the Central and State governments to consider imposing a ban on mass gatherings and super spreader events. They may also consider imposing a lockdown to curb the virus in the second wave in the interest of public welfare,” the SC said.

Let us understand that the national lockdown in the first Chinese Wuhan Virus Wave was to create the requisite infrastructure and capacity to ensure that the country does not go into a crisis and the 7-day moving average (7DMA) of infection does not increase the stipulated doubling rate of 1 day. Moreover, the cost of lockdown to the economy for a single day of lockdown is around USD 6.0 billion (INR 45,000 crores approx).

In the second wave, the issues are different. We have our 7DMA of infections is much lower and the doubling rate is much higher. Moreover, as the immunization drive picks up, we will see the two parameters of 7DMA and doubling rate become even more manageable.

So the issue in front of us is, should we impose a complete lockdown and for how long taking cognizance of the Supreme Court directives.

How Far Are We From the Peak in this Second Wave?

In order to arrive at a predictable view of how long should India and its states go into a lockdown and even out the daily economic losses to the country, there are several parameters which we need to consider:

Second Covid Wave in 12 countries before India
Second Covid Wave Peaks in Different States and Cities in India
Covid Immunisation strategy

Second Covid Wave in 12 Countries before India

we can learn from the other countries which have gone through the second wave before India. Based on the learnings from these countries, our Central and State Governments can work out a formula to impose lockdowns and unlockdowns without hurting the economic activity in the country. The table below gives out the duration of the second wave (in days) and % of population that was infected during the Second Wave:

While it is pretty apparent that each country reacted to the second wave differently. The chart below shows how effectively did each of the 12 countries manage the second wave.

Spread of the Second Wave of Chinese Wuhan Virus

Mexico, Turkey, Israel has the second wave duration of less than 100-days, while Germany and Canada had a duration of over 200 days. The peak of the Second Wave was around 120 days (ie 4 months) as an average). The average population that was infected in these 12 countries was around 2.5%.

This is valuable information and analysis for us to predict where India is in the second wave.

Second Covid Wave Peaks in Different States and Cities in India

Maharashtra including Mumbai was the first state to begin with the Second Wave in India. It has already seen the peak and is around the global average of around mid-point of the 120 days wave (ie. 60 days). We will see India as a country peaking by mid-June 2021, unless we solve all the infrastructure and logistical nightmares which some cities like Delhi is undergoing.

WhatsApp Image 2021 05 04 at 08.40.09 — Analysis by IIT Kanpur Prof Manindra Agrawal

The other silverlining is that many other Indian cities are already in their peaks. An interesting analysis by IIT Kanpur Prof Manindra Agrawal shows.

Covid Immunisation Strategy

As I have already written, our Covid immunisation strategy needs to be reworked. It’s not the political compulsions and broad headlines. We need to immunize over 15% of our population by Mid-May 2021 which we have not yet achieved and most likely going to miss the target for the total duration of the second wave and the imposition of nation wide lockdown durations to recede.

Therefore, the opportunity costs for the country in reducing the duration of the lockdown in the second wave is huge provided we implement our covid vaccine immunization strategy and coverage astutely. Invest, invest, invest in immunizations and make it free for all as an incentive. The rest the statistics at the end to the lockdown will reveal.

No Courts in the World Bear the Economic Outcomes of the Country based on their Judgement!

Yeh Hai Bombay Meri Jaan, Saab Hain Covid Se Paresaan!

Mumbai Covid Second Wave

Preamble

Earlier in the last decade I was part of the Healthcare Committee of Bombay First which was assisting the Maharashtra Government in the Mumbai Masterplan 2045. One of the key concerns and recommendations made by the Committee was building the healthcare infrastructure for the city, Mumbai lags behind in beds per 1000 population with several key peer Indian cities such as Gurgaon, Delhi, Chennai, Hyderabad and Bangalore. Alongside the shortfalls in hospital beds, there is also a shortage of healthcare professionals, equipment and infrastructure needed at various levels in the healthcare delivery supply chain. The second wave of Covid in the city has once again proved that the healthcare delivery to the Mumbai residents is again in short supply, be it beds, healthcare workers or vaccines. With the crisis looming large, the city is on the brink of a long second lockdown. Without delving into the politics and finger pointing, I want to point out the gaps.

The Gaps in Healthcare Delivery and Covid Response in the City

Hospital Beds Shortage in Skewed Distribution Geographically

In Early 2000s, Mumbai has around as per the Bombay First report, 24,984 beds. As per the recent Mumbai Municipality report, there are 24,039 beds in 2021 in Mumbai. In other words, hospital beds have actually reduced over the last 20 years in Mumbai. It is obvious that many nursing homes have shut down as the doctor/owner have found it lucrative to monetise their nursing homes to commercial real estate. As a result, Mumbai is amongst the worst cities in India with a bed to population ratio of 1.17 beds per 1000 (as against the WHO norm of 3 beds 1000). It was 1.63 beds per 1000 in 2000. Moreover, these beds have been unevenly distributed in Mumbai. South Mumbai has around three-fourths of the total beds in the city which was the case in 2000. This means as the city expands to the suburbs, no additional bed capacity has been augmented in the last 20 years in Mumbai.

**Map highlighting the Geographical Coverage of Prominent Hospitals in Mumbai**

Second Covid Wave in Mumbai and Skew in Spread

As per the recent Mumbai Municipality Report on Covid, the highest increase of positive Covid Cases in the Western and Central Suburbs of the City in the last 7 days. (See the chart below). While the alarming rate of growth of covid positive cases in these wards would take less than 28 days to double the cases. As compared to 35 days as an average for Mumbai city. While the response to Covid is in the Western and Central Suburbs, the concentration of healthcare facilities is predominantly in South Mumbai. While this is leading to a lot to movement of people seeking admissions to hospitals for Covid treatment.

Spread of Covid Positive Cases in Second Wave till 8 April 2021

Action Plan for the Future

The cost of real estate in Mumbai very prohibitive for private healthcare operators to set up greenfield hospitals unless there are regulations to incentivise them. Various recommendations provided by our Committee is not been implemented on the ground. The Covid Pandemic is a wake up call for the City administrators to buckle up and bit the bullet to accelerate healthcare infrastructure in the city by our planners for the future.

From Telegraph Road to US$50 Billion Digital Health Silk Road

Digital Silk Road

Preamble

There have been very positive developments for Indian healthcare on the digital front. First, the Indian Telemedicine Guidelines and then the National Digital Health Mission (NDHM). From various think tanks and industry bodies there have been various numbers been project on the incremental value that these will create for the Indian economy. While it is wishful to conjecture the US$ 250 billion dollar impact, what hums in my mind is the Dire Straits famous 14-minutes “Telegraph Road” song. At that time, Mark Knopfler was reading the novel The Growth Of the Soil by the Nobel Prize winning Norwegian author Knut Hamsun and he was inspired to put the two together and write a song about the beginning of the development along Telegraph Road and the changes over the ensuing decades. Using the same analogy, the development of India’s Digital Health Silk Road is feasible on the back of the physical and human healthcare infrastructure. So let’s tune in to my song!

Song Intro – India’s State of Wild-Wild West Healthcare Underdevelopment

India is a country of paradoxes for healthcare infrastructure. India has 18% of world’s population. However, it has around 18% of world’s diseases burden which is increasing. To service this diseases burden, this increasing disease burden, India has only 2.4% of world’s land mass and needs approx 0.01% of world’s land usage for health and well-being purposes. On the clinical manpower supply, India has 1% of world’s lab techs, 9% of world’s health workers, 8% of world’s nurses and doctors. To level up India to the global average, the total investment is approx $460 billion now (165 countries in the world had a GDP of less than $460 billion in 2018). (see Tedx talks My Presentations – Kapil Khandelwal (KK) To address the country’s healthcare needs within the constraints of capital, land and clinical manpower, homegrown solutions are required. At per capita healthcare spend of INR 4116 (USD 55), India’s per capital spend is growing @ 22% pa. However, India is amongst the lowest 4 countries (ranked 129) in the world on healthcare spend as per Oxfam’s latest Commitment to Reducing Inequality Index 2020 at 4% of GDP (against the globally recommended 15% of GDP).

Song Pre-Chorus – Healthcare Gold Rush to the Wild West due to Covid

Let’s set the context under which there has been an accelerated push for healthcare digitization in India. The Great Covid Lockdown. Elective healthcare were down by 70% across the board due to lockdown and priority to Covid affected. The healthcare industry started rumbling and requesting Government to come out with a bail-out package of over INR 50000 crs. Doctors needed to restart their practice through work from home or anywhere. The decade-long deadlock on the telemedicine act between Medical Council of India (MCI) and the Ministry suddenly cleared. There was a mutual agreement to develop the telemedicine road and to regulate the gold rush road to telemedicine in India.

Song Verse – New Digital Health Regulations

The actual verse of the telemedicine regulations in India was announced by the Niti Aayog and the MCI. The Prime Minister in his verse of Independence Day speech also announced the National Digital Health Mission (NDHM). The draft verse of the digital health regulation was available for the general public to review and critique. This was the back drop to the crescendo of the industry chorus on the digital health in India and the opportunity it offered.

Song Chorus – Industry Estimates and Reports

With the regulatory verse out in the public, the industry voice chorus on the real impact to the Indian economy initiated. One industry report estimated the pace of digital healthcare can unlock USD 200 to 250 billion in next 10 years in terms of primary and secondary impact to the nation’s economic value. These value-creation in the march to the wild west will be on three key roads:

Road 1: From episodic care to wellness-oriented care
Road 2: From volume-based to value-based healthcare
Road 3: From siloed systems to streamlined processes

While such stratospheric estimates at a Concorde-neck supersonic speed of the digital health silk road to the Wild West is great for headlines for the chorus, let’s not fool ourselves with the history of what the retail (brick and mortar) and ecommerce underwent in the past decade which went super sonic with investments and valuations on digital retail commerce in India. I have been writing about various issues and roadblocks to digital health path in my various columns which are available at My Library – Kapil Khandelwal (KK)

Song Bridge/Solo – My Estimates on the Investments and On Ground Reality and Impact

For any song chorus there is also a bridge/solo that makes the real sense. Here is my view of the chorus. The last decade received around USD 500 million in different ventures of digital health which were cut-past healthcare business models of the West. The current technology spend on these is around USD 500 million per annum. For the USD 250 billion impact on the ground to be realized a straight forward deep healthtech investments of around 5% (around USD 12.5 billion) is to be right away with a gestational lag of around 3 years on a conservative 2x on valuations return and not on revenue growth. In other words, all the sum total of early stage VC money raised in 2019 globally will have to be directed to India and that too in healthtech. A tough ask and a pipe dream.

Let’s also focus on the available data sets which is the oil to run the digital health motorway in India that we currently have. Currently, India’s data sets on healthcare is of the Telegraph road era. These include information on radiology, EMR, labs, meds, monitoring, doctor exam, nurse observations, claims data, billing and transactions. This data set is available for the Bharat Stack 1 (the elite-12% of India’s population). The real driver for the growth is the Bharat Stack 2 (the next billion of India’s population) and 30-odd points of healthcare data (not under the current NDHM regulations) which will make the digital health silk road truly a reality. An incremental investments of USD 18 billion in deep tech ventures in next generation digital health ventures to create a true high-speed digital health motorway of the future.

Therefore to land the stratospheric Concorde of the chorus that were singing, we require a total of USD 30 billion of tech investments on the word go. Where is that sort of money? We still don’t know where this money raised will be invested and that is not the point we are belabouring. Taking that cue, we have been tracking around 150 healthtech ventures in our annual healthcare and life sciences investment heatmap on digital. We will need to create 10000s of ventures that can create the depth and width of healthcare apps for the next billion today!

Song Outro – The Rhythmic Orchestration of Capacity Creation in Physical and Digital Healthcare

While most songs orchestra fade and end abruptly, this India digital health silk road would need a different Outro to its song. On a conservative basis, we estimated that the overall India digital health silk road opportunity is valued conservatively at USD 50 billion as it currently stands with the different constraints in our physical and technology healthcare delivery system. This is on the back of three key multiplier effect on the Indian healthcare economy:

Increasing per capita spend on health and well being of the next 1 billion population as disposable incomes goes up moving from the informal sector to formal sector in next 10 years
Incremental 1/6^th disease burden our population carries as compared to world due to the genomic make up and ageing population in next 10 years through alternative healthcare delivery models
Emerging alternative digital healthcare delivery models that would play on the shortages in the physical delivery system as penetration and acceptance of mobile first delivery of healthcare services become mainstream and productivity of the clinical manpower is augmented by healthtech

Money for Nothing – Covid Vaccines for Free

Another Mark Knopfler hit which talks about the excesses of a rock star and the easy life it brings compared with real work. Between the Independence Day announcement and the Bihar elections manifesto announcement, there seems to be shift in the focus and the priorities it seems from our Rock Star Prime Minister. The Government would not have the funds to spend on the Digital Health Silk Road if it spends its budget on providing free Covid Vaccines to the masses.

Only time will tell how the orchestra and the song of the great India digital health gold rush will play out!

Excerpts of this blog published as an article in VC Circle: